Taking stock of the improvement in EM budget deficits

Budget deficits have narrowed from their 2020 peaks across the emerging world. The improvements in Brazil and Argentina – where deficits appear to be narrower than their pre-pandemic levels – provide welcome relief given both countries’ debt troubles, but we doubt that their public finances will remain so strong. Meanwhile, deficits remain wider than their pre-pandemic levels in much of Asia and Central Europe, largely reflecting fiscal packages which should support economic recoveries.
Kimberley Sperrfechter Assistant Emerging Markets Economist
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Emerging Markets Economics Update

Disruptions no longer worsening, but Omicron a threat

November’s PMIs offered tentative signs that the worst of the supply disruption may have passed, but the bigger picture is that manufacturers in the emerging world remain stretched. And while it’s still too early to tell, the Omicron variant could exacerbate existing strains. The upshot is that supply constraints are likely to continue to weigh on industry for some time yet.

1 December 2021

Emerging Markets Trade Monitor

The impact of Omicron on EM trade

If the new Omicron variant leads to tighter containment measures across the world, that would probably prop up demand for pandemic-related goods to the benefit of Asian exporters. Meanwhile, oil producers are likely to see external positions deteriorate if the plunge in prices is sustained. But arguably the most clear point for now is that the new variant will lead to renewed slumps in tourism, adding to balance of payments risks in the likes of Tunisia and Sri Lanka.

30 November 2021

Emerging Markets Economics Update

The Omicron variant and the threat to EMs

There’s a lot that we don’t know about the new Omicron variant. But if it proves more virulent, the economic fallout would probably be largest in EMs in parts of Africa and South and South East Asia that have lower vaccination rates, more limited fiscal space and/or larger tourism sectors. The new variant may also temper the pace of tightening cycles in parts of the emerging world. In view of the wider interest, we are also sending this Emerging Markets Economics Update to clients of all our Emerging Markets services.

29 November 2021

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Emerging Markets Economics Update

Central Europe strengthens, but headwinds in Asia

The PMIs for June show that manufacturing strengthened in most of Emerging Europe, but virus outbreaks, supply chain disruptions and a softening of demand created headwinds for industry in Asia. One common theme is that supply shortages persist, which is causing price pressures to build in most EMs.

1 July 2021

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A strong Q2 in Central Europe, weakness in India

The latest data suggest that the Central European and some Asian economies will probably post strong GDP growth in Q2, but virus outbreaks have weighed on recoveries in India and parts of Latin America.

22 June 2021

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Net capital outflows from emerging markets have eased over the past few weeks and Turkey and India (which suffered large outflows in April and May) have started to see renewed inflows. Even if outflows pick up again, the fallout in the major emerging markets should be limited.

9 June 2021
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